Textile millers and garment exporters are at odds over the government’s move to withdraw the duty-free import facility for certain types of yarn, a step meant for protecting local spinning mills.
The disagreement surfaced publicly after a joint press conference in Dhaka on Monday by leaders of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).
Later the same day, Bangladesh Textile Mills Association (BTMA) President Showkat Aziz Russell sent a statement to the media rejecting different claims by apparel exporters.
Russell said that, following a request from BTMA, the Bangladesh Trade and Tariff Commission (BTTC) sent a letter to the commerce ministry recommending suspension of the duty-free yarn import facility after consultations with BTMA, BGMEA and BKMEA leaders.
BGMEA, however, said while the BTTC held meetings with leaders from both the textile and garment sectors, apparel exporters’ views were not given due weight in the duty withdrawal recommendation by the commerce ministry.
To protect local textile millers, the commerce ministry has requested the revenue board to suspend the duty-free benefit for imports of certain counts of yarn
The association also pointed out that the BTTC meeting minutes were published on January 13, while the recommendation letter to the commerce ministry was sent a day earlier, on January 12.
Russell said the commerce ministry wrote to the National Board of Revenue (NBR) requesting withdrawal of the duty-free import facility for 10 to 30 count yarn, but did not propose imposing any new tariff on the import of these widely used yarns.
He added that the ministry also did not ask for any safeguard duty on yarn imports.
Acting BGMEA President Salim Rahman said in a separate statement that the average tariff on yarn imports in Bangladesh stands at 39 percent. Export-oriented garment manufacturers are currently allowed to import yarn at zero duty under the bonded warehouse facility.
If the bond facility is withdrawn, exporters would have to pay the full duty, which could weaken the competitiveness of Bangladeshi garment shipments in the global supply chain, BGMEA said.
Russell said the subsidy provided by yarn exporting countries amounts to 50 cents per kilogram, while the commerce ministry letter cited a figure of 30 cents. BGMEA echoed this discrepancy in its statement.
On value addition, Russell said Bangladesh will need to achieve at least 40 percent value addition to retain preferential market access after graduation from the least developed countries group. He argued this would be possible through double transformation, such as producing garments from locally spun yarn.
BGMEA countered that value addition of up to 60 percent can be achieved even when garments are made from fabrics produced using imported yarn. The association said double transformation is possible with imported inputs as well.
BTMA President Russell said that before the commerce ministry issued its letter to the NBR, several meetings involving senior government officials and leaders of BTMA, BGMEA and BKMEA reached a consensus that the government should withdraw the bonded facility for yarn imports where local mills are fully capable of meeting demand.
